Lawmakers grill ObamaCare official over co-op failures

Lawmakers grill ObamaCare official over co-op failures
© Greg Nash

Senators on Thursday pressed a top ObamaCare official over a string of failures in non-profit health insurers known as co-ops. 

Twelve of the 23 co-ops, set up under ObamaCare to compete with larger private insurers, have gone out of business due to financial problems. 


The Senate Finance Committee on Thursday questioned Andy Slavitt, the acting administrator of the Centers for Medicare and Medicaid Services (CMS), about the roughly $1.2 billion in government loans that went to the failed co-ops and why the administration did not pick up on problems sooner. 

“I think saying $1.2 billion has been wasted is probably accurate,” Sen. Rob PortmanRobert (Rob) Jones PortmanGraham calls handling of Kavanaugh allegations 'a drive-by shooting' Overnight Health Care: Senators target surprise medical bills | Group looks to allow Medicaid funds for substance abuse programs | FDA launches anti-vaping campaign for teens Bipartisan group wants to lift Medicaid restriction on substance abuse treatment MORE (R-Ohio) said. 

Slavitt said that CMS is working with the Department of Justice on recovering the loans to failed co-ops, but the administration has acknowledged that it will not get all of the money back. Paying the federal government back, as opposed to claims or other expenses, tends to be a low priority for a co-op in receivership. 

Portman, who is facing a tough reelection race this year, questioned the additional loans given to co-ops after they began operating, saying that the administration should have realized the ventures were failing. 

“All of them were losing money, this is while you’re providing them this taxpayer money,” Portman said. “These are the kind of red flags that any prudential regulator would have looked at, and I think [the Department of Health and Human Services] blew it.”

Slavitt pointed to a lack of information when the co-ops first began in 2014, adding they did not have a history of claims and other data. 

“The decisions were made with the best information that folks had,” he said. “I would say it wasn’t until the first and second quarter of 2015 that, at least I felt, we started to have a really good picture of the profitability.”

Going forward, Slavitt said that CMS will look for ways to help the 11 remaining co-ops, mentioning the possibility of getting the co-ops access to outside capital. There are currently limitations on accessing outside capital.

“I am eager to loosen up the capital rules,” Slavitt said. 

He also mentioned the possibility of co-ops merging as “very much on the table.”

CMS said it will be releasing more information on the path forward “in the next day or so.”

Slavitt expressed some confidence that the remaining co-ops can make it through 2016 without shutting down. 

“Currently, I think all of the co-ops that have entered the 2016 plan year have every opportunity to be successful,” Slavitt said.

More broadly, Slavitt argued that turbulence in the early years of the program was to be expected, as these small, non-profit insurers set out to compete with more established players. 

“It doesn’t surprise me that in the first couple of years the co-ops are going to lose money,” he said. 

Democratic lawmakers did not deny that there were problems with the co-op program but argued bipartisan solutions are needed, not more votes on repealing ObamaCare. 

“Let’s fix problems in the Affordable Care Act in a bipartisan fashion and make sure we don’t undermine or destroy the achievements,” Sen. Bob CaseyRobert (Bob) Patrick CaseyPoll: Democrats hold big leads in Pennsylvania Senate, governor races The Hill's Morning Report — Sponsored by United Against Nuclear Iran — Kavanaugh, accuser say they’re prepared to testify Trump: 'Good news' that Obama is campaigning again MORE (D-Pa.) said.

Sen. Ron WydenRonald (Ron) Lee WydenHillicon Valley: NYT says Rosenstein wanted to wear wire on Trump | Twitter bug shared some private messages | Vendor put remote-access software on voting machines | Paypal cuts ties with Infowars | Google warned senators about foreign hacks Overnight Health Care: Opioids package nears finish line | Measure to help drug companies draws ire | Maryland ObamaCare rates to drop Google says senators' Gmail accounts targeted by foreign hackers MORE (D-Ore.) said Congress is not blameless, as it cut funding from the co-op program from $6 billion to about $2.4 billion.

Slavitt is currently the acting commissioner, as his nomination for the permanent position is before the Senate Finance Committee.

“I think you’ve shown again why you would be a very good choice to be the permanent administrator,” Wyden said at the end of the hearing. “So I’m going to do everything I can to try to move that along as well.”

Slavitt was nominated in July. Asked how the process is proceeding, Aaron Fobes, a spokesman for Republicans on the committee, said: “Mr. Slavitt is currently undergoing the Finance Committee's bipartisan vetting process.”